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Scrutiny of Davis and crew is taking hold. The state controller, Kathleen= Connell, also has a well written op-ed critical of Davis in today's LA Ti= mes. =20 Kevin 213-926-2626 =20 [IMAGE]Los Angeles Times - latimes.com =09[IMAGE] [IMAGE]=09 [IMAGE] [IMAGE] =09Home | Subscribe | Register | Site Map | Ar= chives | Print Edition | Advertise | Feedback | Help [IMAGE]=09 Marketplace jobs * cars * homes * rentals [IMAGE] Arts and Enter= tainment Movies , Music , TV , Dining print edition [IMAGE] Fro= nt Page Inside "A" California Business Sports So Cal Living Calendar = Editorials, Op-Ed [IMAGE] [IMAGE] Weekly [IMAGE] Health Food Tech T= imes Highway 1 Workplace [IMAGE] [IMAGE] Sunday [IMAGE] Books Calen= dar Magazine Opinion Real Estate Travel TV Times [IMAGE] [IMAGE] [I= MAGE] [IMAGE] [IMAGE] The World [IMAGE] [IMAGE] [IMAGE] The Natio= n [IMAGE] [IMAGE] [IMAGE] California [IMAGE] [IMAGE] [IMAGE] Busi= ness [IMAGE] [IMAGE] [IMAGE] Politics [IMAGE] [IMAGE] [IMAGE] Spo= rts [IMAGE] [IMAGE] [IMAGE] Technology [IMAGE] [IMAGE] [IMAGE] Tr= avel [IMAGE] [IMAGE] [IMAGE] Editorials, Op-Ed [IMAGE] Sections [I= MAGE] Books Columnists Education Food Health Highway 1 Obituaries = Real Estate Religion Science So. Cal. Living Sunday Opinion Tech Time= s Times Poll Workplace/Jobs [IMAGE] [IMAGE] Editions [IMAGE] Print E= dition National Wireless [IMAGE] Extras [IMAGE] Crossword Horoscop= e Lottery Traffic Weather Multimedia [IMAGE] [IMAGE] [IMAGE] Feat= ures [IMAGE] [IMAGE] [IMAGE] SITE MAP [IMAGE] [IMAGE] Subscripti= on Services Subscribe Change of Address Vacation Stops Suspend Delive= ry College Discount Gift Subscriptions Mail Subscriptions FAQ [IMAG= E] [IMAGE] [IMAGE] [IMAGE] [IMAGE] Classifieds jobs , homes , cars , re= ntals Print Ads Shopping Advertising Supplements [IMAGE] [IMAGE] LA= Times Initiatives [IMAGE] Times in Education Reading by 9 Times-Mirro= r Foundation Events [IMAGE] [IMAGE] =09[IMAGE]=09[IMAGE] July 31, 2001= [IMAGE] Talk about it [IMAGE] E-mail story [IMAGE] Print THE STATE= Davis' Energy Advisors Draw SEC Attention *Probe: Under review is the pos= sible use of inside information to buy power company stocks. GOP rival of = governor requested the inquiry. [IMAGE] [IMAGE] Times Headline= s * Latinos Assured Water Is OK * Car Dealer Not Bound by Ad Error, = Court Rules * Suspect in Simi Valley Serial Rapes Arrested * New LAPD= Radios Get Negative Reviews * 2 Shot to Death, 1 at Home by Stray Bulle= t more < [IMAGE] [IMAGE] Subscribe By WALTER HAMILTON JEFFE= RY L. RABIN and DARYL KELLEY, TIMES STAFF WRITERS The Securities and Exch= ange Commission has launched a preliminary inquiry into whether energy con= sultants advising Gov. Gray Davis used inside information to trade stocks = of power companies doing business with the state, a source with knowledge = of the matter said Monday. The federal agency began its review late last = week, the source said, in response to a request from California Secretary = of State Bill Jones. A Republican rival of Davis, Jones charged that stock= trading by consultants may have violated federal laws barring buying and = selling based on information not available to the public. On Friday, top = aides to the governor disclosed that five consultants had been fired for = possible conflicts of interest between their official positions and their = personal finances. As news of the SEC inquiry spread through the capital M= onday, Davis officials were confronted by a flurry of questions about who = in the administration owns energy stocks. Financial disclosure records fi= led by the governor's spokesman, Steve Maviglio, show that he owns between= $10,000 and $100,000 in a Texas company he and his boss have accused of m= aking "obscene" profits while California has been "on its knees." Maviglio= said he bought the shares in Houston-based Enron Corp. in 1996. "It's no= t a crime to own energy stock," Maviglio said. He also owns 300 shares of= San Jose-based Calpine Corp., which has the largest share of the $43 bill= ion in long-term state power contracts. Maviglio placed the order for the= stock on May 31, one day after San Jose's mayor dropped his opposition to= a controversial Calpine plant favored by the governor and others. Under t= he terms of Maviglio's purchase, the transaction was completed about three= weeks later when the stock reached $40 a share, a value of $12,000. It ha= s since fallen in value. "I viewed it as a good long-term investment," M= aviglio said, adding that he purchased the shares for his retirement accou= nt based on publicly available information. The Davis administration has = spared Calpine the kind of fierce criticisms that it has leveled at other = electricity suppliers, such as Enron. But California's grid operator has i= dentified the company as one of many energy merchants to overcharge the st= ate millions of dollars. The fired consultants also owned shares in Calpi= ne, ranging in value from several thousand dollars to more than $100,000, = records show. Another top Davis administration official, legal affairs s= ecretary Barry Goode, disclosed in his economic interest statement that he= recently held between $100,000 and $1 million in another out-of-state com= pany accused of multimillion-dollar price gouging. In a statement, Goode = said he sold his stock in Williams Co's. a month after he began working fo= r the governor in February. Goode said the shares were supposed to be sold= before he went on the state payroll, but his broker failed to do so. In = light of the recent disclosures, Secretary of State Jones said the governo= r must do more to ensure the public that its interest comes first. "The g= overnor should direct all of his staff to immediately file updated conflic= t of interest statements that reflect current holdings and any activity si= nce their last statement of economic interest was filed," said Jones, who = is seeking the GOP nomination for governor. Word of the SEC's entry into = California's energy problems comes as the governor faces harsh criticism f= rom lawmakers and others for the quick and broad hiring of highly paid pri= vate consultants to guide him through the crisis. In his written request = to the SEC, Jones said that recently filed disclosure documents showed tha= t at least one consultant bought and sold shares of two energy companies w= ithin the same month, raising "a red flag" about the possibility of inside= r trading. State law prohibits officials from participating in decisions= involving their personal financial interests. The five consultants fired= last week were among 11 named in Jones' letter, delivered to the San Fran= cisco office of the SEC last Wednesday. It was not clear which individuals= are the focus of the SEC's inquiry, or whether the agency's review would = result in any charges. Two of the former traders said Monday that they ha= d not been contacted by federal investigators and knew nothing of an inqui= ry into possible insider trading. But William Mead, fired Thursday, said = it is no mystery why so many of his colleagues owned Calpine stock. Mead = said he bought it 2 1/2 years ago and made so much money he recommended it= to his colleagues last year, while they all still worked for the now-defu= nct California Power Exchange in Alhambra. Calpine power was not traded on= that exchange, so there was no conflict of interest, he said. Mead and = three other energy traders--hired by the state in February and March--were= terminated by the Davis administration for allegedly buying power for the= state from Calpine while owning the company's stock. Fired traders Herman= Leung, Peggy Cheng and Constantine Louie did not list the date of their C= alpine purchases on financial statements that the state required to be fil= ed only two weeks ago. "But I'm sure they bought it while they were still= at the power exchange, because that's when we discussed it," Mead said. "= It was kind of like a hobby. I'm sure it wasn't done with the intent to ma= nipulate." Former trader Elaine Griffin, who also owned Calpine stock and= resigned two weeks ago to take another job, said she didn't know she owne= d energy securities until she checked with her financial advisor July 13, = just before leaving her state job. Griffin said she and her husband own a= bout $10,000 worth of Calpine stock in individual retirement accounts mana= ged by their advisor, who bought the stock Feb. 1 without their knowledge,= she said, after research found it to be a good investment. "I kind of fe= el like we've been used for political reasons," Griffin said. "We would ha= ve disclosed anything right at first, but they never asked." As a trader= , Griffin said she occasionally bought Calpine power for the state, but on= ly at market prices. Meanwhile, two Democratic political consultants, who= helped Davis polish his image after the ongoing energy crisis caused his = poll numbers to plummet, have agreed to accept no payment for their work a= s part of an out-of-court settlement of a taxpayer lawsuit. Tom Hiltachk,= a lawyer for conservative anti-tax activist Lewis Uhler, said the settlem= ent was reached last Friday after negotiations with lawyers for communicat= ions consultants Mark Fabiani and Chris Lehane. "Now they will not receiv= e one red cent," said Hiltachk. "Very simply Mr. Fabiani and Mr. Lehane ha= ve agreed to cease all activities for the governor, to accept no payments = for their services and to basically get out of the consulting business wit= h the governor." As his part of the agreement, Hiltachk said, Uhler with= drew his lawsuit Monday morning. Uhler had filed a lawsuit against the tw= o consultants and Controller Kathleen Connell in June contending that they= should not receive any payments because of a conflict of interest. The tw= o men also did consulting work for financially troubled Southern Californi= a Edison, which was seeking help from Davis and the Legislature. Connell,= a former Los Angeles mayoral candidate who has been at odds with Davis si= nce he endorsed an opponent, had held up the payments pending the outcome = of the lawsuit. Under an agreement with Davis, the men were to have been = paid $30,000 a month for six months. Fabiani and Lehane could not be reac= hed for comment. * Times staff writers Nancy Vogel and Virginia Ellis i= n Sacramento and Robert J. Lopez in Los Angeles contributed to this story.= For information about reprinting this article, go to http://www.lats.co= m/rights/register.htm =09[IMAGE]=09 a d v e r t i s i n g Subscribe NO= W and SAVE on your home delivery subscription! [IMAGE]Cool down rooms w= ithout touching the thermostat A floor lamp that spreads sunshine all = over a room Bring the power of the digital revolution to your fingert= ips Private DVD theater puts a floating 6-foot screen right before you= r eyes! It?s time to put all of your photos onto your computer NASA = research creates "smart bed" sleep surface [IMAGE] =09 =09[IMAGE] Copyright 2001 Los Angeles Times By visiting this site, y= ou are agreeing to our Terms of Service . Powered by Genuity =09
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